Italy's economy minister resigns in despair

The shock resignation rocked the Italian political and business world and dealt a blow to Premier Silvio Berlusconi's government, less than a year before general elections.

Italian news reports said Siniscalco had resigned after his failed efforts to oust Bank of Italy governor Antonio Fazio.

Siniscalco had been scheduled to attend an International Monetary Fund meeting in Washington, but Italy will now be represented by the ministry's director-general instead.

"Really, I couldn't take it anymore," Siniscalco was quoted as saying by the Italian paper La Repubblica.

Berlusconi told his conservative coalition would decide on a replacement during a meeting of party leaders later Thursday.

The center-left opposition urged the whole government to step down and call early elections.

Italy is scheduled to have a general election in mid-2006.

However, news of Siniscalco's resignation did not immediately produce major changes in the yield paid by Italian government bonds.

According to Italian daily La Repubblica, Siniscalco contended the government was "immobile" in the scandal surrounding Fazio, who has been accused of discriminating against a Dutch bank in a takeover battle.

"The problem isn't Fazio, but those who are incapable of solving the problem," La Repubblica quoted Siniscalco as saying. "For this I'm not embittered, I'm scandalized."

Siniscalco had repeatedly urged Fazio to step down, but the governor has resisted the call.

The accusations against Fazio center on his handling of a struggle between Banca Italiana Popolare Scarl and Dutch rival ABN Amro Holding NV for control of Banca Antonveneta SpA. Wiretapped conversations published in the Italian media suggested Fazio favored the Italian bank's bid. Fazio denies wrongdoing.

The Bank of Italy governor is appointed for life and the government cannot force him out. Siniscalco has been among Fazio's fiercest critics, while Berlusconi has kept a largely neutral stance in the matter, the AP reports.